An Australian court case could have a revolutionary effect on the local debt market, according to managing director for Standard & Poor's in Australia and New Zealand, Christopher Dalton.

International lenders and investors have always viewed Australia favourably in terms of the rights of creditors and shareholders. But this perception may change with a landmark 6-1 majority High Court decision handed down recently in relation to failed mining giant, Sons of Gwalia. The ruling sets a precedent for shareholders' claims, in certain circumstances, to be elevated to the status of ordinary creditors in a liquidation of a company, ranking them alongside unsecured financers.